I don't have the answer. (For refunds, go around back, near the restroom with a lock on the door and the sign that says Beware of the Blog.) However, Eric Glasner, writing in this past week's Culture and Literature section of Haaretz, girds himself to take on the question in an article entitled "Why Do We Need Higher Literature? Because That's What Particular People Make." (It's in Hebrew, and unfortunately the English cult-and-lit section does not include a translation.)
His argument is somewhat scattered, and a full understanding (which I don't think I have) is dependent on an appreciation of the history of modern Israeli literature, and in particular the character, typical of a certain school of novel, of the talush or outsider. Glasner says that a number of new novels, written in the past few years, have returned to the talush from a new direction, as an escape route from the Scylla and Charybdis of contemporary Israeli society: overidealistic Zionism and fundamentalist Orthodoxy.
After some paragraphs about critics and criticism, Glasner finally asks the question of the title. He considers and rejects two other answers (belles lettres are enjoyable; they're better than best-sellers) before settling on the third. Higher literature is necessary because it's the product of a certain professional class, novelists and such, who are engaged in it: a craft from the pens of craftsmen.
Though I'm not doing justice to the argument -- after all, I'm not translating the article verbatim or in full -- I'm not exaggerating its weakness all that much. It's a Wittgensteinian view, one might say, just as religion (according to such a view) is defensible because it's connected to a certain world, particular and unique. But Glasner never really gets around to saying what the purpose of function of this literature-producing class might be.
The article is continued next week, but I have a hunch that my favorite answer, or attempt at an answer (since I haven't thought about this in any detail) won't be addressed: higher literature is a moral agent, and the success of its calling depends on the seriousness and boldness with which it addresses moral questions, no matter at what level or with what philosophical suppositions. As I said, this wouldn't be an answer, merely a start at an answer. It's what many lay readers in the U.S., and probably in Israel too, would give as a fumbling intuitive stab at an answer. However, it might be asking too much for an Israeli critic, even with all the cultural and religious riches at his disposal, to explicitly link literature and moral aspirations. Too many associations, too many demons might be called up.
I might be proven wrong by this coming week's continuation. I hope so.